The Federal Reserve Intend to Raise Interest Rates Shortly

The Federal Reserve still intends to raise its interest rate this year, barring any unseen surprises, the Fed chairwoman, Janet L. Yellen, announced on Thursday.

Ms. Yellen, making the announcement a week after the Fed claimed it was not ready to raise interest rates just yet, reiterated that the central bank was not planning to wait much longer. She said that labor market conditions were improving and that the Fed expected inflation to follow suit.

But Yellen cautioned that if the Fed’s expectations for growth were disappointed again, it might again delay lifting rates.

“Achieving these conditions will likely entail an initial increase in the federal funds rate later this year, followed by a gradual pace of tightening thereafter,” Ms. Yellen said in a speech at the University of Massachusetts. “But if the economy surprises us, our judgments about appropriate monetary policy will change.”

Ms. Yellen concluded her remarks with obvious difficulty and only after a long pause. A spokeswoman for the Fed, Michelle Smith, issued a statement saying Ms. Yellen “felt dehydrated at the end of a long speech under bright lights.”

“As a precaution,” the statement said, emergency medical technicians examined her. “She felt fine afterward and has continued with her schedule Thursday evening.”

Ms. Yellen’s speech echoed recent comments by other Fed officials who have sought to frame the outcome of the September meeting of the committee as a pause in the fight toward higher rates, rather than a signal that the Fed’s intentions had changed.

She also played down the likelihood that slower growth in other countries would cause the Fed to halt raising rates.

“The committee is monitoring developments abroad, but we do not currently anticipate that the effects of these recent developments on the U.S. economy will prove to be large enough to have a significant effect on the path for policy,” she said.

Two Fed officials who voted with Ms. Yellen at the September meeting to delay an increase in rates have since said they, too, expect to start raising rates later this year.

Dennis Lockhart, president of the Federal Reserve Bank of Atlanta, said in a speech earlier this week that he voted to keep rates near zero because he was concerned market volatility might be a symptom of broader economic problems.

He said he wanted to see more recent economic data before moving forward. But Mr. Lockhart said he was “satisfied” that labor markets had improved sufficiently to start raising rates, and that he was “comfortable enough” inflation would rise.

John Williams, president of the Federal Reserve Bank of San Francisco, described the September decision as a “close call” in a speech last week in Armonk, N.Y. “Given the progress we’ve made and continue to make on our goals, I view the next appropriate step as gradually raising interest rates, most likely starting sometime later this year,” Mr. Williams said.

Ms. Yellen’s speech was largely devoted to explaining why the Fed expects inflation to rise back toward the 2 percent annual pace the Fed regards as most healthy. Since the recession, inflation has generally stayed under that pace, and prices have barely increased over the last year.

While acknowledging that economists do not entirely understand the movements of inflation, Ms. Yellen said the Fed remained most confident in the longstanding view that inflation in the long term was determined by public expectations. Economic slack, changes in import prices and other events can affect it in the short term, but eventually inflation returns to trend.

Ms. Yellen said that model suggested inflation would soon begin to do that. About half of the shortfall in inflation over the last year was the result of lower energy prices, and most of the rest was the result of a stronger dollar. She said the role of economic slack in holding down inflation was steadily diminishing, which is the reason she expects a rebound as the temporary restraints fall away.

“The fact that these survey measures appear to have remained anchored at about the same levels that prevailed prior to the recession suggests that, once the economy has returned to full employment (and absent any other shocks), core inflation should return to its prerecession average level of about 2 percent,” she said.

Ms. Yellen also played down the importance of the decline in another measurement of inflation expectations, which is derived from the market prices of financial assets. She said recent declines most likely reflected other factors, like increased demand for safer assets, rather than a long-term shift.

“To be reasonably confident that inflation will return to 2 percent over the next few years, we need, in turn, to be reasonably confident that we will see continued solid economic growth and further gains in resource utilization, with longer-term inflation expectations remaining near their prerecession level,” she said. “Fortunately, prospects for the U.S. economy generally appear solid.”